US Treasury Secretary increases pressure to negotiate debt ceiling

US Treasury Secretary Janet Yellen

On May 15, US Treasury Secretary Janet Yellen emphasized that newly released data further reinforced previous warnings that the world's leading economy was in trouble.iat risk of early default, possibly on June 1.

Ms. Yellen made the statement ahead of difficult negotiations on the debt ceiling scheduled to take place on May 16 between President Joe Biden and Republican leaders.

The US Treasury Department has previously warned of "catastrophic" consequences if the US runs out of cash to cover its financial obligations; including not being able to pay federal employees, leading to the possibility of interest rate hikes that would hit businesses hard.

In a letter to House Speaker Kevin McCarthy, Secretary Yellen stated: "We continue to estimate that the Treasury Department will be unable to meet all of the government's obligations if Congress does not act to raise or suspend the debt ceiling by early June, and that this will likely happen soon, possibly as early as June 1."

According to observers, President Joe Biden and Republican leaders have many issues to discuss. Currently, the two sides are still deeply divided on the terms to agree on raising the debt ceiling.

Republicans continue to condition their support for raising the debt ceiling on President Biden agreeing to deep spending cuts. However, Democrats have called for raising the debt ceiling without strings attached.

On the same day, the White House announced that President Biden has no intention of cutting short his upcoming one-week trip to the Asia-Pacific region to address the domestic debt ceiling issue.

Speaking at an online press conference, White House National Security Council spokesman John Kirby stated that as planned, President Biden will depart for the Japanese city of Hiroshima on May 17.

The US leader will attend the G7 Summit, followed by meetings in Papua New Guinea and Australia. The White House currently has no plans to shorten or change the scheduled itinerary.

The world's leading economy hit its $31.4 trillion debt limit in January, forcing the US Treasury to take extraordinary measures to continue paying for government operations.

However, if the debt ceiling is not raised or suspended, the US government risks defaulting on its financial obligations, severely impacting the economy.

On May 14, US President Joe Biden said he was still "optimistic" about finding an agreement on the debt ceiling with the Republican Party, thereby preventing a debt crisis and many consequences for the domestic and global economy.

Negotiations between the two parties in the US Congress on raising the public debt ceiling continue to fall into a deadlock despite many warnings that the debt default will threaten the global economy as well as shake the position of the world's leading economy.

While President Joe Biden wants to raise the debt ceiling unconditionally, Republican lawmakers are demanding cuts in public spending if they want to raise the federal debt ceiling, which is currently at a record $31.4 trillion.

According to VNA